Pros and Cons of Buying a Property in Dubai

The United Arab Emirates has become one of the most popular countries for investment and living, thanks to its remarkable progress in the real estate sector. This has attracted many Iranians who are interested in buying property in Dubai. The main drawbacks of buying property in Dubai include additional real estate fees, market fluctuations, Dubai’s hot and dry climate, and more.

On the other hand, the key advantages of buying property in Dubai are no taxes, potential rental income, and more. To learn more about the pros and cons of buying property in Dubai, stay with us until the end of this article on NewWay.

11 Major Drawbacks of Buying Property in Dubai

As you know, every investment opportunity comes with both advantages and disadvantages. Buying property in Dubai is no exception. Despite its numerous benefits, there are some drawbacks to consider.

Here, we present 11 of the most important drawbacks of buying property in Dubai that you should be aware of before making a purchase. These have been carefully reviewed based on advice from reputable real estate experts and the experiences of previous buyers.

• Lack of knowledge about Dubai’s property laws
• No permanent residency in the UAE
• Insufficient information about property purchase
• Paying additional real estate fees in Dubai
• Hot and dry climate of Dubai
• High healthcare costs in Dubai
• High cost of living
• Property market fluctuations
• Delays in property delivery by developers
• Currency exchange fluctuations
• Oversupply in the market

1. Lack of Knowledge About Dubai’s Property Laws

Being aware of the legal framework is crucial when investing in any market, especially real estate. Over the past decades, the UAE has taken significant steps to enhance legal protections for foreign investors. However, buyers themselves should be aware of potential legal issues and familiarize themselves with property laws.

To avoid costly mistakes in real estate investment, investors should always consult with experienced real estate agents before making any transactions. Consulting with experts helps significantly reduce risks and ensures a safer investment process. Lack of knowledge about property laws and failure to seek expert advice are among the main drawbacks of buying property in Dubai.

2. No Permanent Residency in the UAE

Unfortunately, one of the drawbacks of buying property in Dubai is that purchasing any type of property, such as an apartment in Dubai, does not grant you UAE citizenship. Only citizens of Gulf Cooperation Council (GCC) countries are eligible for permanent citizenship. However, there are options to obtain residency in Dubai through property purchase and even the UAE Golden Visa.

According to the law, if the minimum property purchase price is around 750,000 AED (approximately $204,000 USD), you become eligible for a 2-year temporary UAE residency! This residency can be renewed, and its duration depends on the amount invested in the property. In some cases, you may also qualify for a UAE Golden Visa. For more detailed information, you can refer to the articles available on our website.

3. Lack of Sufficient Knowledge About Property Purchase

As you know, investing in any field requires expertise, skills, and experience. Unfortunately, some buyers who have previously purchased property in Dubai did so without proper knowledge or guidance, resulting in financial losses. That’s why consulting with experienced real estate agents is crucial to protect and grow your investment.

4. Additional Real Estate Fees in Dubai

Buying a property is not limited to the purchase price alone. You also need to cover several additional costs, including maintenance fees, insurance, utility subscriptions (electricity, water, and gas), registration fees, and more. Some of these costs include:

“This includes the Dubai Land Department (DLD) fee of 4%, a property registration fee of 2,000 AED to 4,000 AED, a mortgage registration fee, agency fees (like that of real estate agents and conveyance fees), and a property valuation fee.“

Source: focus.hidubai.com

5. Dubai’s Hot and Humid Climate

Dubai enjoys pleasant weather during the fall and winter seasons, with roughly eight months of the year offering comfortable conditions. However, one of the main drawbacks of living in this city is its high heat and humidity during the summer. The hot and humid climate can be challenging for those who are not accustomed to intense heat.

6. High Healthcare Costs in Dubai

The UAE’s healthcare system is among the best in the world, thanks to its quality and advanced facilities. The government continually emphasizes improving healthcare services. However, healthcare costs vary between Emirati citizens and expatriates.

In general, Emiratis have a separate insurance system, while expatriates rely on private health insurance. This makes medical and healthcare services more expensive for non-residents, which can be considered one of the drawbacks of buying property in Dubai for those planning to live in the country.

7. High Cost of Living

Dubai is recognized as one of the most developed and modern cities in the Middle East and the world. Consequently, property prices and living expenses in Dubai are higher compared to other major Middle Eastern cities. A detailed article on this topic is available on NewWay, which provides valuable insights for anyone considering living in Dubai.

8. Property Market Fluctuations

All financial markets, including stocks and gold, experience fluctuations; price volatility is an inherent part of any investment industry. The real estate market is no exception, with property prices in Dubai rising or falling depending on various factors such as external economic conditions, policy changes, and more.

9. Delays in Property Delivery by Developers

Unfortunately, a small number of construction companies may fail to deliver projects on time. To minimize this risk, it is essential to consult reputable real estate agents who work with reliable and well-known developers. Investors should also conduct thorough research on construction companies in the UAE before making any commitments.

10. Currency Fluctuations

The UAE Dirham (AED) is pegged to the US Dollar and fluctuates with changes in the dollar’s value. These fluctuations can impact the purchasing power of foreign investors in the property market. Investors should consider currency risks and be prepared to manage their investments accordingly. Fortunately, the value of the AED has generally remained stable over the past few decades, and experts predict this positive trend will continue in the coming years.

11. Oversupply of Properties

In some cases, there may be an oversupply of real estate, which can affect rental yields and property prices. Factors such as development plans, investor demand, and market conditions contribute to oversupply.

Experts predict that the Dubai real estate market will stabilize in the coming years. Regulatory measures, cost-effective and diversified development plans, improved infrastructure, and strong legal frameworks have all been implemented to address potential oversupply issues.

Advantages of Buying Property in Dubai

The UAE is a popular destination for those seeking to live in a developed country or explore new investment opportunities, such as buying a penthouse in Dubai. Understanding the drawbacks of buying property in Dubai before investing can help you make better decisions. In this section, we highlight the main advantages.

• Property ownership is tax-free!
• High return on investment through rental income
• Excellent living conditions
• Growing economy
• Stable currency and inflation control
• Option to pay for property in installments
• Access to top educational institutions
• High annual tourist traffic
• Eligibility for the UAE Golden Visa
• Presence of leading construction companies in Dubai
• High safety and low crime rates
• High-quality healthcare services
• Advanced technology infrastructure
• Home to the world’s largest and best shopping centers
• Advanced transportation systems

1. Property Ownership Is Tax-Free!

You may find this surprising, but currently, there are no income or inheritance taxes for investors in the UAE! When comparing tax rates in European or developed Asian countries to the UAE, especially for villas, buying a villa in Dubai is extremely cost-effective, offering excellent income potential and high returns.

The only costs involved are additional fees, such as a 4% property transfer fee and municipal fees for waste collection. The absence of taxes and facilities like installment property purchases in Dubai are key factors attracting citizens and investors from many European countries to buy property in Dubai.

2. High Return on Investment Through Renting

The annual rental income from your property in Dubai, combined with potential capital appreciation, demonstrates a relatively high rate of return in this developed city. Even if you do not plan to live in the UAE, renting out your property presents an excellent investment opportunity.

An interesting statistic: many investors purchase property specifically for rental income. Rental yields in Dubai are approximately 8–10% higher than in other major global cities, making long-term investment in the property market a highly attractive opportunity.

3. Excellent Living Conditions

We have previously published a comprehensive article on life in Dubai, which provides detailed insights. Top-notch amenities and high-quality living are among the key advantages of buying property in Dubai. The city is one of the most luxurious in the world, with homes constructed using premium materials and advanced technologies.

Additionally, the presence of fine dining, world-class shopping centers, effective domestic and foreign policies, and other factors make living in Dubai highly comfortable and attractive.

4. Growing Economy

When evaluating the pros and cons of buying property in Dubai or other major cities worldwide, one of the most important factors is the local economy. The UAE ranks as the second-largest economy in the Middle East and is among the top global economies. Its rich resources and increasing gross domestic product have created favorable conditions for international trade and business in the city.

5. Stable Currency and Inflation Control

Unlike many countries struggling with inflation and declining currency value, the UAE occasionally experiences negative inflation! The stability of the UAE Dirham is one of the main reasons investors are attracted to Dubai’s property market.

For example, investing in a hotel in Dubai is an excellent way to preserve and even grow the value of your money year after year.

High-quality real estate development has also given a significant boost to the city’s economy. Dubai maintains strong international trade relations, which further contributes to regional economic growth. Its largest trading partners include the United States, China, and India. With numerous high-quality shopping centers, Dubai is also known as the shopping capital of the Middle East.

6. Option to Pay for Property in Installments

Installment payments are a practical option for buyers who cannot pay the full amount upfront. The UAE government has established frameworks that allow foreign investors to purchase properties in installments, making real estate more accessible.

7. Access to Top Educational Institutions

Education in the UAE has seen significant growth in recent years, making it an attractive destination for those seeking high-quality education based on international standards. Innovative educational companies (CERT) have established practical training centers in various academic fields.

English-language schools and universities in Dubai maintain high academic standards and rank well internationally. Therefore, access to quality education and a bright future is one of the key advantages of buying property in Dubai.

8. High Annual Tourism Rate

Dubai is one of the most popular tourist destinations in the world. Thanks to its close proximity to Iran, it has always been a favorite vacation spot for many Iranians. From iconic skyscrapers such as the Burj Khalifa to vast shopping malls and stunning deserts, Dubai’s tourist attractions make the city a vibrant hub for global tourism.

Interestingly, Dubai alone holds over 400 Guinness World Records! Tourism is one of the key advantages of investing in real estate in the UAE, as it helps keep the property market active and thriving.

9. Eligibility for the UAE Golden Visa

The UAE Golden Visa is one of the country’s most sought-after residency programs. It is granted to talented professionals, investors, healthcare workers, and property buyers. To qualify for the Golden Visa, applicants must meet at least one of the following requirements:

• Register a practical and beneficial invention
• Establish a company in Dubai (with a minimum capital of 10 million AED)
• Invest in the public sector (minimum of 10 million AED)
• Purchase shares in a UAE-based company worth at least 10 million AED
• One of the main advantages of buying property in Dubai for Iranians is the opportunity to obtain the UAE Golden Visa.

10. Presence of Top Construction Companies in Dubai

Dubai’s real estate and construction sector has experienced remarkable growth in recent years. The presence of world-renowned developers, skilled professionals, and the use of high-quality building materials have all contributed to Dubai’s reputation for architectural excellence and its globally recognized skyscrapers.

11. High Safety and Low Crime Rates in Dubai

Safety is one of the most important factors when choosing a place to live or invest. Fortunately, Dubai is considered one of the safest cities in the world for both individuals and families. The crime rate is exceptionally low, allowing residents and visitors to enjoy peace of mind. You can comfortably walk through the streets of Dubai at any hour of the day or night, ensuring a secure and tranquil lifestyle for yourself and your loved ones.

12. High-Quality Healthcare System

One of the key advantages of owning property in Dubai is access to a high-quality healthcare system. Medical centers across the UAE are equipped with the latest state-of-the-art medical technology, providing residents with world-class healthcare services.

13. Advancement in Technology

Dubai is rapidly transforming into a fully smart city. The UAE government has planned 173 smart city initiatives aimed at enhancing the comfort, convenience, and quality of life for its residents.

14. World-Class Shopping Centers

Shopping malls are among the most prominent attractions in any city, and Dubai is home to some of the most famous and largest malls in the world, including The Dubai Mall and Mall of the Emirates. The Dubai Mall, which is part of the Burj Khalifa complex, covers an area of 12 million square feet (equivalent to over 50 football fields) and is recognized as the largest shopping mall in the world.

This mall features more than 1,200 stores, 22 cinema halls, a luxury five-star hotel, an Olympic-sized ice rink, and over 120 restaurants and cafés. The Mall of the Emirates, spanning over 2.8 million square feet, is also one of the world’s largest shopping centers, hosting more than 700 shops, a multi-dimensional cinema, and a large indoor ski slope.

15. Advanced Transportation System

Dubai’s transportation system is one of the most advanced in the world, with metro lines, buses, and trams accessible throughout the city. In addition, water taxis and ride-hailing services provide convenient options for traveling quickly via waterways.

Dubai International Airport is also one of the busiest air terminals globally, allowing residents and visitors to reach destinations around the world quickly and efficiently.

Other Advantages of Purchasing Property in Dubai

• Access to the latest and most attractive recreational facilities, water sports, concerts, and more;
• Eligibility for temporary residency by purchasing property;
• Implementation of sound economic and business policies by UAE leaders;
• Availability of the most up-to-date global products;
• Proximity of the UAE to Iran, reducing travel costs;
• Friendly relations between Emiratis and Iranians;
• UAE leaders have extensive plans for national development and growth;
• The UAE is one of the key economic hubs in the Middle East.

Conclusion

In this article from NewWay, we discussed the key points regarding the advantages and disadvantages of buying property in Dubai. We hope this guide has been helpful and provided you with the essential information you need for making informed decisions.

It is important to remember that purchasing property in Dubai is a highly specialized process and should always be done under the guidance of experienced, knowledgeable, and trustworthy professionals. Any misstep can potentially jeopardize your investment and lead to significant financial losses.